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Social Gaming Boosts Virtual Goods Sales in Social Networks

Martin — Tue, 24 Mar 2009 23:42:40 +0000

During the past months, our trainee Matthias analyzed the virtual goods market, especially in the area of social gaming, social networks and virtual worlds. Today, SnipClip announced at the GamesBeat conference, where Oliver will pitch for SnipClip at the Who’s Got Game competition, that it will publish the results. The press release highlights some interesting insights:

Average revenue per monthly active user per year:

non-gaming social apps: $0.37
social games: $3.65
virtual worlds: $8.04

Market potential for 2008:

non-gaming social apps: $215 millions
social games: $340 millions
virtual worlds: $244 millions

November 24, 2008 -- Forum on Virtual Economies (1)
March 6, 2008 -- “Virtual goods market size” (7)
January 27, 2009 -- Social Gaming & Virtual Goods (2)
December 9, 2008 -- Xtopia Video Online: Virtual Goods and Social Communities (0)
November 18, 2008 -- Xtopia 2008: SnipClip (1)

Misunderstandings: TencentÂ´s Revenues from Virtual Goods

Matthias — Thu, 11 Dec 2008 16:26:53 +0000

On my search for revenue numbers from virtual good sales I stumbled many times across the figures of Tencent. Yesterday for example,Â I watched the presentation of Susan Wu on the Le Web conference. She mentioned that Tencent has revenues of $1billion and 70% come from sales of virtual goods.Â I doubt that this figure is true.

LetÂ´s have a closer look.

I think the number is derived from the press releases of Tencent. In 2007, Tencent published that they generated $344.1M revenues from their Internet value added services (that is 65% of their $523.1M total revenues). In the three of four quarter results of 2008 (1st, 2nd and 3rd) Tencent announced that they generated $644.1M revenues from their Internet value added services (68% of their $943.1M total revenues)

The question is: what are these Internet value added services? Tencent aggregates QZone, QQMembership, QQShow, QQMusic and QQLive in their Internet value added services. I doubt that all of these services have revenues from virtual goods. I am also confused that TencentÂ´s instant messaging services are not included in the Internet value added services. According to Susan Wu the most virtual goods revenues of Tencent come from the instant messaging services.

In my opinion it isÂ unclear how much of TencentÂ´s revenues are generated from virtual goods. What do you think? Am I missed something here?

Good bye and stay tuned.

March 15, 2010 -- Kino.de Uses SnipClip to Engage its Fanbase and Broaden its Reach On Facebook (32)
December 9, 2008 -- Susan Wu: Virtual Goods Make Real Money (0)
September 12, 2008 -- Virtual goods are going to be common for the public (2)
June 1, 2010 -- Cash = Community * Context * Content * Currency (0)
February 15, 2010 -- Oceans – An Entertaining Yet Educational Fanbook With Impressive Underwater Pictures (1)

Susan Wu: Virtual Goods Make Real Money

Martin — Tue, 09 Dec 2008 18:44:00 +0000

Here is Susan Wu’s presentation about the virtual goods market:

A must watch! Susan is one of the leading experts on virtual goods.

December 11, 2008 -- Misunderstandings: TencentÂ´s Revenues from Virtual Goods (1)
December 9, 2008 -- Xtopia Video Online: Virtual Goods and Social Communities (0)
November 18, 2008 -- Xtopia 2008: SnipClip (1)
November 17, 2008 -- Virtual Goods Summit 2008: Videos Online (2)
October 14, 2008 -- My Talk about Virtual Goods in Social Networks at the BarCamp Munich (0)

Forum on Virtual Economies

Matthias — Mon, 24 Nov 2008 06:54:15 +0000

On my search for more figures from virtual items sales in social networks or virtual worldsÂ I got in contact with Vili Lehdonvirta from virtual-economy.org. I am so happy, that he and his colleague Juho Hamari started an own forum-thread on virtual-economy.org, where everybody can share revenue data and other metrics of virtual asset sales market.

This is a really good start and I hope, this can be a central point of metrics of the virtual asset sales market.

Good bye and stay tuned.

March 25, 2009 -- Social Gaming Boosts Virtual Goods Sales in Social Networks (5)
March 6, 2008 -- “Virtual goods market size” (7)
June 1, 2010 -- Cash = Community * Context * Content * Currency (0)
January 27, 2009 -- Social Gaming & Virtual Goods (2)
January 20, 2009 -- Wealthy Virtually Overnight (0)

Virtual Goods Market Size in 2006

Martin — Tue, 11 Nov 2008 17:35:21 +0000

We already blogged about the size of the virtual goods market. There are no real numbers, but different estimations. Here’s another one from a scientific institute:

Many people of a certain age may consider such gifts a waste of their hard-earned and very real money. But not so a growing number of tweens and teens as well as 20- and even some 30-somethings, who spent around $2.1 billion in 2006 on virtual goods and services, according to researchers at Finland’s Helsinki Institute for Information Technology (HIIT).

Via For the Holidays: Good Things Come in Virtual Packages: Scientific American

March 25, 2009 -- Social Gaming Boosts Virtual Goods Sales in Social Networks (5)
November 24, 2008 -- Forum on Virtual Economies (1)
March 6, 2008 -- “Virtual goods market size” (7)
February 13, 2008 -- How big is the cake? (0)
June 1, 2010 -- Cash = Community * Context * Content * Currency (0)

Survey about the Future Trends on the Internet

Matthias — Mon, 06 Oct 2008 11:38:41 +0000

On Netzwertig I found a survey about the future trends on the Internet. 51 media experts were interviewed, in which direction the Internet is developing during the next few years. The market research instituts AGOF, IVW and INFOnline presented the results of the survey on the OMD – a fair for digital marketing.

One trend on the Internet is paid content. Here are some selected facts:

1. Social networks have problems with the montetization

2. Paid content as a future trend

3. Paid content as one of the three future business models

Good bye and stay tuned.

January 28, 2009 -- Trend in 2009: Mobile Tagging (0)
November 26, 2008 -- 10 Tips for Monetizing Social Traffic Through Virtual Currency (0)
November 16, 2008 -- New Trend: SnipClip (0)
November 11, 2008 -- Web 2.0 Is Not a Threat, It’s a Chance. (0)
October 14, 2008 -- My Talk about Virtual Goods in Social Networks at the BarCamp Munich (0)

The Long Tail

Martin — Wed, 16 Apr 2008 09:00:40 +0000

Probably everyone in the web industry knows this book: The Long Tail by Chris Anderson (a.k.a. the founder and editor in chief of Wired a.k.a. the magazine of the new economy). I don’t like to summarize the content here – Wikipedia has a fine summary. And there is also a website, i.e. a blog. In short terms, the long tail are the niche markets that are growing thanks to the Internet. If you didn’t read the book yet, read it!

Special vs. General

What often surprises me: people refer to the long tail as an argument for building (very) special interest communities (i.e. social networks). Don’t get me wrong. This is fine as long as it’s not your business but your passion. In every business you have fixed costs, especially development costs. These costs are the same whether you build a social network for soccer fans from Munich or for soccer fans from the rest of Germany. However, the rest of Germany is much bigger and will bring you much more profit. Think this far further and you end up with something like Facebook – a generic social network.

Open Platform vs. Whitelabeling

In my opinion, Facebook and other meta networks are the real suppliers for the long tail of communities. Their market is not a part of the long tail. Their market is the long tail. Of course, it isn’t this simple, because with greater generality the features become more and more unspecific and thus less attractive for some users. Facebook made a wise step to open its platform for external specialized applications, but the branding is still Facebook. This gives chances for whitelabeling products and so the development costs of special interest communities decrease. However, the solution must be flexible enough to be customizable to the users need.

Niche market vs. Mainstream

What also strikes me: everybody talks about the long tail and forgets the mainstream. Comparing the market volume the niche markets and main markets are equally important and most successful web start-ups also include mainstream products. I think integrating both parts in your business is important for two reasons: market shares and user demands. Don’t donate your competitor anything and offer your customers everything. Of course, this isn’t easy because mainstream products and niche products are often very different.

Down the tail vs. Up the tail

So the final question is: do you (as a web start-up) move up the tail – from niche products to mainstream products? Or the other way round: from the mainstream to the niches? I think this depends on your specific service or product and on the market. Maybe some of my readers have deeper insights here and more experiences.

Have a good time!

September 16, 2008 -- Do you like Facebooks new design? (0)
June 18, 2008 -- “Will Selling Goods be the Answer for Social Networks?” (0)
June 4, 2008 -- Social app metrics (0)
May 20, 2008 -- “Facebook Traffic Declines 10% in April” (0)
May 14, 2008 -- Facebook Developer Garage Hamburg – a bullet point summary (0)

We’ve to update our business plan – thanks to eMarketer

Martin — Thu, 20 Mar 2008 01:21:39 +0000

eMarketer published the new numbers for the US online advertising market:

Via Online Advertisers To Spend Through Turbulence

February 6, 2010 -- Job Opportunities at Social Entertainment Startup (1)
June 4, 2008 -- Social app metrics (0)
May 20, 2008 -- “Facebook Traffic Declines 10% in April” (0)
May 19, 2008 -- “Myspace/Facebook App Platforms” (0)
May 13, 2008 -- “Metrics: Trouble in Online Adland” (0)

People love entertainment and social networks – so we do (as a Social Entertainment company)

Martin — Thu, 20 Mar 2008 01:08:53 +0000

Via The Web in Chartsâ€”Google vs. Microsoft-Yahoo vs. China

April 9, 2008 -- “Eine Industrie wird sozial” (0)
February 6, 2010 -- Job Opportunities at Social Entertainment Startup (1)
March 25, 2009 -- Social Gaming Boosts Virtual Goods Sales in Social Networks (5)
January 27, 2009 -- Social Gaming & Virtual Goods (2)
December 12, 2008 -- Message of the Day: About Brands and Fans (0)

“Global Or Die: Is There A Future For Local Startups?”

Martin — Thu, 13 Mar 2008 09:17:39 +0000

Michael Arrington from TechCrunch asks: “Is there a future for local startups?”. His answer: “No.”. His advices (I marked those statements bold which were most enlightening to us):

Think global as you create the business

Move to Silicon Valley

Create an original product: new and different

Do not create a copycat, unless your goal is only to get acquired

Try to raise funds from world-class VCs

Hire people from all nationalities as much as possible

Register your domain names in the key countries you are interested in (and the large ones you are not interested in)

Protect your brand Worldwide

Make a site that is language ready day one, even if you launch in English

gather an international community since day 1

Talk to the most active members of the community to help you understand their market and become evangelists there

Create an application that lets your community translate the site by themselves

Languages are not the same in all the countries they are spoken

Do not think that Europe is the U.K.

Manage costs properly

Never do a 50/50 deal with anyone

Do key partnerships with large local players

Never trust that if the partner is large your service will be a success

Create an international reseller program

Kill your local copycats

Buy your local copycats if you canâ€™t kill them

Be very pragmatic

Do not apply any of this to Asia

Do not apply any of this to Russia

This advice only applies to Internet startups

The detailed article can be read on TechCrunch.

March 26, 2008 -- Sharepoint, no Wiki (0)
March 3, 2008 -- PHP is bad. (0)

SnipClip. Paid content is back. » the market is always right

Social Gaming Boosts Virtual Goods Sales in Social Networks

related posts

Misunderstandings: TencentÂ´s Revenues from Virtual Goods

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Susan Wu: Virtual Goods Make Real Money

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Forum on Virtual Economies

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Virtual Goods Market Size in 2006

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Survey about the Future Trends on the Internet

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The Long Tail

Special vs. General

Open Platform vs. Whitelabeling

Niche market vs. Mainstream

Down the tail vs. Up the tail

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We’ve to update our business plan – thanks to eMarketer

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People love entertainment and social networks – so we do (as a Social Entertainment company)

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“Global Or Die: Is There A Future For Local Startups?”

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